The Public Private Education Facilities and Infrastructure Act of 2002
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The Public Private Education Facilities and Infrastructure Act of 2002 2003 VIRGINIA ENGINEERS CONFERENCE Chris Lloyd McGuireWoods Consulting October 10, 2003. PPTA Success Stories. VMS - Contract for maintenance of 25% of Virginia’s interstate lane miles

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The Public Private Education Facilities and Infrastructure Act of 2002

2003 VIRGINIA ENGINEERS CONFERENCE

Chris Lloyd

McGuireWoods Consulting

October 10, 2003


PPTA Success Stories Act of 2002

  • VMS - Contract for maintenance of 25% of Virginia’s interstate lane miles

  • Interstate 895 - $325 million, connecting suburbs to Richmond International Airport

  • Route 288 - $236 million, 17.5 mile beltway around Richmond, support Capital One expansion

  • Route 28 - new interchanges on access road serving Dulles International Airport

  • Coalfields Expressway - new road for SW Virginia, leverages dedicated federal funds


Public-Private Education Facilities and Infrastructure Act of 2002

What are the components of a successful proposal?

  • Delivers something in demand

  • Private sector shares in the risk

  • Minimizes impact on state/local debt model

  • Faster, better, and cheaper

  • Deliver something unique

  • Broad political support

  • Open and inclusive process that keeps the public informed

  • Strong partnership between staff and elected body


Public-Private Education Facilities and Infrastructure Act of 2002

What is it?

- An alternative procurement tool that allows public entities to more efficiently develop infrastructure and achieve better value for the taxpayer

What it is NOT?

- A panacea that resolves all procurement issues

- A way to get something for nothing


Public private education facilities and infrastructure act of 2002 funding

Structures of 2002

Design-build

Design-build-O&M

Build-own-operate

Build-own-revert

Sale-leaseback

Lease-purchase

Long-term O&M contracts

Various development agreements

Funding/Value

Traditional government sources (GF/NGF)

User fees

Service contracts

Lease payments

Commercial revenues

Private activity bonds

Depreciation and other tax credits for private entities

Leverage funding streams

Public-Private Education Facilities and Infrastructure Act of 2002 - funding


Public private education facilities and infrastructure act of 2002 funding1

Typical deal structure of 2002

Team offers “turn-key” project delivery

Contractor willing to assume project delivery risk

Life-cycle maintenance is included

Other revenue-generating activities are suggested

Team members provide free services that benefit government entity even if project does not proceed

Achieves cost savings through design-build and financing

Financing vehicles use solely local funds or 63(20) structure

Public-Private Education Facilities and Infrastructure Act of 2002 - funding


Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

What is happening across Virginia?

  • Education facilities in Falls Church and Stafford County - agreements signed

  • Pending school proposals in Chesterfield, City of Fredericksburg, Manassas Park, and City of Winchester

  • Longwood University facilities

  • Public safety facilities in Roanoke and Frederick Counties (others in the works)

  • Capitol Square redevelopment

  • Prison construction program

  • Science Museum of Virginia at Belmont Bay


Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

Anticipated growth areas

  • Water and wastewater

  • Public safety

  • Colleges and universities with small/unsophisticated endowments

  • Courthouses and other local government buildings

  • Local/regional jails

  • Technology procurement

  • Performance contracting/energy conservation


Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

Who are the major players?

  • Northrop Grumman Mission Systems

  • Haskell Company

  • Centex Construction

  • Clark Construction

  • English Construction

  • Moseley Architects

  • Morgan Keegan

  • Lehman Brothers

  • J.P. Morgan Chase

  • GE Capital

  • Lincoln Properties

  • Fluor


Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

Trends - How Are Local Governments Reacting?

  • Implementation of PPEA guidelines becoming more widespread

  • “Smart” firms are actively looking for good projects

  • “Smart” local governments are seeking maximum leverage

  • Deals are closing very quickly

  • Public input is lacking

  • Creative financing has not been embraced

  • Board vs. staff debates


Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

Potential pitfalls

  • Too much work goes to out-of-state companies or large conglomerates

  • Cost savings are hard to define

  • Process seems rushed, appearance of inside deals

  • Debt capacity is compromised

  • Voters feel left out of the process

  • Non-performance by a contractor (picked the wrong team)

  • Board vs. staff debates cause long term problems


Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

How can engineers get more involved?

  • Assess your capabilities – where have you done projects that have made you a trusted resource

  • Talk to contractors – they have the lead

  • Survey government contacts for potential projects

  • Be willing to put in some sweat equity


Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

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